Daily Alert: Thursday 25th May 2017

Mark Nugent Daily Alert, May 2017

Forex Analysis for Thursday 25th May 2017

Economic Calendar

Wednesday:

FOMC Minutes

– FOMC minutes show the Committee thought it was prudent to wait for further evidence that recent weak data was transitory before hiking again.
– Fed staff presented a plan to set gradually increasing limits on balance sheet reinvestment that would start low and be raised every 3 months until fully phased in; nearly all Committee members viewed the proposal as favourable.
– USD and treasury yields backed up following the release as the Fed sounded a little more uneasy about the domestic economic outlook (although it suggested that the assessment of the economy had changed little since the March policy meeting) and no real detail was given on balance sheet normalisation.

In Canada, the Overnight Rate was kept at 0.5% as per expectation.

Market Reaction

The USD dropped on the more cautious Fed tone. The S&P500 broke through the 2400 level and closed above it for a new all-time high. Oil was essentially flat and gold rose. The US 10 Year Treasury yield dropped a little and the JPY was essentially flat. This adds up to a slight move towards risk-off. The Dow30, Nasdaq and FTSE100 were also up but other indices were rather static. The EUR appears to be consolidating and the GBP grinds downwards. The commodity currencies remain rangebound.

News Media

May’s majority and the impact on the GBP
EUR strength

Today’s Calendar

UK Second Estimate GDP; OPEC Meetings.

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